Attack of the Zombie Ideas: Medicare Eligibility Age Edition

I’m a little late to this, at least in terms of the FTL-speed of the news cycle, but earlier this week a letter (PDF) was sent to the White House from Speaker John Boehner concerning the House GOP’s ‘vision’ for a fiscal cliff resolution. One aspect not mentioned in the letter, but reportedly spoken by an aide and widely disseminated in the news reports, was the idea of raising the eligibility age for Medicare from its current 65 to 67. As the now-conventional wisdom goes, since people are living longer we can safely raise the eligibility age and save some money to boot.

Yet as several in the blogosphere have noted this idea has several downsides. Sarah Kliff reports (all emphasis in bold are mine):

If the Medicare age were raised, the thinking has gone, the 3.3 million 65- and 66-year-olds  would still be guaranteed access to health coverage through the tax subsidies. The lowest-income seniors — those earning less than 133 percent of the federal poverty line – would qualify for Medicaid.

That’s the upside. Health care economists see a number of downsides, too. For one thing, Medicare tends to be a pretty efficient program. Its costs have grown slower than private health insurance plans. The Center for Budget Priorities and Policy estimates that, while the federal government would save $5.7 billion, the rest of the health care system would end up spending $11.4 billion more to provide those same benefits.

Matt Yglesias piles on:

[…] That includes $3.7 billion in higher costs for 65- and 66 year-olds, $4.5 billion from employers through company-sponsored insurance, $0.7 billion from state governments, and $2.5 billion in higher average prices for third parties once younger seniors are shifted out of the Medicare risk-pool and into the general population.

That’s an absurd means of saving the federal government money—akin to raising $12 billion in taxes and then setting half the money on fire. The only people who actually benefit from this shift are health care providers who get to charge higher prices to 65- and 66-year-olds.

This idea isn’t actually all that new. The folks at The Incidental Economist (which should be required reading for those interested in health policy) covered this last year. They even have an FAQ on it (here). In one post Aaron Carroll flags research showing that raising the eligibility age would also have health consequences:

The authors found that, relative to those with insurance before age 65, those without insurance prior to Medicare eligibility spent much more money on health care after they became Medicare eligible. In other words, people wait to get care until their Medicare kicks in.  This is bad both for health and for the federal government’s bottom line.

Delaying Medicare even longer would likely make this worse. People would forego care longer, health would suffer, and Medicare would pay for the consequences later.

Remember, people are also contending that raising the age is a necessary step because of life-expectancy gains. What is rarely mentioned is that not all such gains are equal (also from TIE):

LE-by-earnings1-500x413BUT, you protest, with the Medicaid expansion from the Affordable Care Act the most vulnerable citizens would be caught by the safety net, right? Not if you’re unfortunate enough to live in a state that plans on not expanding Medicaid:


Where the States Stand

Via: The Advisory Board Company

Let’s recap:

  • The cost (to the rest of the system) of raising the eligibility age will be double what it saves the federal government.
  • The only other beneficiaries are private-sector providers who will get to charge seniors more for their health care needs.
  • It’s a highly regressive policy — affecting low-income seniors who haven’t experienced the life-expectancy gains that are the impetus for the policy in the first place.

Thus it appears as though the primary policy proposal from the GOP for savings in Medicare looks (as it relates to the ends if not so much the means) a lot like their primary idea for savings in Medicaid — which is to simply have the program serve fewer people. It’s also a particularly odd position coming from a political party that just spent two years claiming to be the defenders of Medicare. That is, it’s an odd position if you’re not utterly cynical about the political process. All the rhetoric surrounding Medicare during the election may after all have been a strategic messaging frame for eliciting fear about a program the party intended on limiting anyway. 

This policy has all the hallmarks of an idea that will not die. Why? Because it’s based on a talking point which can’t be killed (life expectancy!) that has enough surface-intuitiveness that is easily swallowed by the un or misinformed public. It then becomes an easily digested and regurgitated talking point for pundits and Very Serious People who can utilize it as a clever centrist-sounding idea for entitlement reform. That these things seem to congeal in a way that molds itself into Washington consensus, while to the rest of us it looks like Rick talking to imaginary people on a disconnected phone, is disheartening to say the least. Participating in irrational behavior during a zombie crisis is understandable; probably even necessary. But advocating zombie ideas that could hurt older Americans, even during a perceived debt crisis, should be unacceptable.

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